Uranium Prices

The Smart Profits Report: Issue #418
Monday, May 7, 2007

Uranium Prices: Global Fuel Shortage Triggers Blistering Bull Market in Nuclear Energy
By Mark Whistler
Small-Caps Specialist, Mt. Vernon Research

Here’s a quick quiz for you… Take a look at the chart below and see if you can guess which commodity it represents.

Uranium Prices Spike Between 2004 - 2007

Any ideas? It’s uranium prices.

To put the commodity’s incredible rise in perspective, as recently as 2004, uranium prices were just $15 per pound. Today, it’s $113. That’s a 653% rise in just three years. In 2007 alone, the price has ballooned 57%.

The reason for this historic surge in uranium prices is simple: Decades of underinvestment, a lack of exploration, and strict regulations have led to a crippling worldwide supply shortage. In fact, a Merrill Lynch research report reveals that global uranium supplies are nearly 20% below worldwide demand.

And with the world crying out for a cleaner environment and alternative energy sources other than oil and fossil fuels, that means uranium - and the nuclear power it provides - has never looked more promising. Consider the current statistics:

Nuclear energy now supplies 16% of the world’s total power.
There are 441 power plants in 36 countries that depend on uranium.
Nuclear energy now powers about 350 million homes and businesses worldwide.

Two Reasons Why Uranium Prices Won’t Fizzle

Aside from the regular supply and demand economics, here are two other reasons why the uranium boom isn’t likely to turn to fizzle any time soon:

Nuclear Takes Over From Fading Fossil Fuels: The International Energy Agency says the world only has enough fossil fuels to meet energy demand until 2030. That’s bad news, considering global population growth is expected to jump from 6.5 billion people today to 9 billion by 2025.More people means more need for energy… and more strain on natural resources. The U.S. Energy Information Department predicts that from 2002 to 2025, global energy consumption will soar almost 60%, due to population growth. But as fossil fuels diminish, nuclear energy could pick up the slack.

Coal Is Dirty… But Nuclear Cleans Up: Coal is one of the dirtiest energy resources, causing acid rain and spewing out greenhouse gases like sulfur dioxide and nitrogen oxide that leave cities choking under a blanket of smog. Carbon dioxide levels are now the highest in 150,000 years. In China, the country burns coal to generate nearly 80% of its electricity - a statistic that means China is “home to 16 of the planet’s 20 worst cities,” according to the World Bank. In Beijing alone, coal-fired power plants spit out 800 million tons of dirt and soot on the city every year.

But nuclear energy is a cleaner, sustainable alternative. For example, nuclear power has reduced U.S. greenhouse gas emissions alone by 128 trillion tons per year… reduced global carbon dioxide emissions by 1.6 million tons… and prevented 90,000 tons of heavy metals from being released into the earth’s atmosphere.

The UNECE predicts that by 2030, nuclear energy could surpass coal as the world’s leading energy source.

These factors are contributing to an increase in nuclear energy development - and the U.S. is doing its part…

Uncle Sam Goes Nuclear

Because the U.S. has around 520,500 million tons of coal and abundant natural gas supplies, expensive U.S. nuclear investment hasn’t been a priority. But the environmental concerns of fossil fuels, coupled with heightened greenhouse gas regulations that will make coal power more expensive is boosting support for U.S. nuclear development. And recent new energy legislation includes special tax and loan incentives that encourage nuclear reactor development.

Moreover, many energy experts believe nuclear power can provide increased energy security by loosening America’s risky dependence on oil supplies from volatile nations.

The shift is already underway. TXU Corporation has already shelved plans to develop its coal-powered plants, focusing instead on building new nuclear facilities in Texas.

In addition, 15 currently operational reactors have had their licenses extended from 40 years to 60 years - with others expected to follow. And with over 20 proposed nuclear facilities currently under review, it could pave the way for faster expansion of the nuclear industry in the U.S. and boost development overseas, too.

For example, China’s government is doing its best to beef up its nuclear power…

China Scrambles For More Power Through Nuclear Energy

China currently has 10 nuclear plants online… but is working to add 30 more. This is a remarkable amount, but the country actually needs the equivalent of 200 fully-operational plants to meet its rampant energy needs. It needs to triple its electricity output over the next 15 years, just to keep pace with demand.

And such sizzling demand means one thing: Rising uranium prices.

Countries like Japan and France, which rely heavily on uranium for the health of their economies, are also keen to secure supplies. France, for example, generates more than 80% of its energy from nuclear power.

That could trigger even more uranium development and keep prices at sky-high levels.

And to cap it off, the uranium market is about to enter a brand-new phase…

Sunday, May 6, 2007: Not Just “Any Given Sunday”

On April 16, the New York Mercantile Exchange (NYMEX), the world’s largest commodity trading exchange, signed a major 10-year deal with the world’s leading nuclear information group, Ux Consulting Company (UxC), that will see uranium futures contracts trade for the first time, and serve as the price benchmark for this explosive industry.

Coincidentally, the announcement came just 10 days after uranium prices surged 19% in a week - from $95 per pound to $113. It was the largest single-week jump since price monitoring began in 1968.

Uranium futures trading will get underway this Sunday (May 6), giving investors a brand-new way to participate in this soaring market. In the long-term, this could easily propel prices higher, so it’s well worth having some uranium in your portfolio.

Good investing,

Mark Whistler

Today’s Smart Profits Cribsheet

While other commodities such as oil, gold, and natural gas all endure their ups and downs, uranium is defying logic. In July 2003, prices hovered just under $11 per pound… but then set off on one of the most outstanding bull markets in history. Prices haven’t dropped once since then and now trade at $113 per pound.

The uranium industry received a further boost last week when Australia’s anti-nuclear Labour Party scrapped its 25-year ban on uranium mines. Despite not holding power nationally, this is important news, as the party rules all six of Australia’s states and two territories… and thus has the power to veto any mining work. In addition, pro-nuclear Australian Prime Minister John Howard announced that his government will try to overturn laws that prevent nuclear development in Australia and, from 2008, set up a nuclear regulatory body. Australia boasts the world’s largest uranium reserves.

In addition to the water industry, uranium offers one of the most explosive long-term investment opportunities of the 21st century. Both commodities are soaring amid critical supply shortages that have sparked fierce demand and sent price rocketing higher. Over the past year, the Xcelerated Profits Report team has honed in on such investments, picking two winners each in the water and uranium industries. To find out more about how you can gain access to an exclusive team of professional traders and profit from both these explosive investment areas, please follow this link.

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